Here’s what I hate about gift cards.

  • Having to remember to carry around gift cards, I don’t like my wallet to resemble George Costanza’s.
  • Having to decide in advance that I want them. I don’t always know what store or restaurant I’m going to visit. At least far enough in advance that I can pick up a gift card.

So American Express Membership Rewards has come out with a neat innovation that solves both of those two issues that I have when redeeming points for gift cards.

Their new Mobile Gift Card app feature lets you redeem points in real-time to your smartphone so that you can pay instantly in-store with that card. It turns your points into store-specific money in real-time (and the cards can be used online as well).

They’ve launched this so far with Banana Republic, Gap, Old Navy, PBteen, Pottery Barn, Pottery Barn Kids, West Elm and Williams-Sonoma.

So is this a good way to use your points? I’d argue that it’s not.

  1. Your Membership Rewards points are worth far more transferred to miles. I love Membership Rewards points for transfers to Singapore Airlines, Singapore offers much better business and first class award space to their own members than they do to members of partner programs like United and US Airways. And Amex points are a great and quick way to get miles in Singapore’s program. They’re great for British Airways Avios when there’s a transfer bonus. You get much better value redeeming your points for international premium cabin travel, by several orders of magnitude.

  2. If you’re just redeeming points for gift cards, you’re better off with a different credit card. You’re not going to do better than about a penny a point in value. If that’s how you want to use your points you should just get a cash back card like the Fidelity Investment Rewards American Express which gives you 2% back on everything. Cash is better than a gift card, and 2% cash is better than 1 cent per Membership Rewards point.

  3. It’s better to buy gift cards than redeem for them. You can often buy gift cards at a discount at a site like PlasticJungle.

  4. You’re giving up rewards you could earn buying those gift cards. You can earn 5 Chase Ultimate Rewards points per dollar spent on gift cards purchased at office supply stores with an Ink Plus or Ink Bold card. Or 2 American Express points per dollar spent on gift cards purchased at grocery stores with an American Express Premier Rewards Gold card. Or 6% cash back with a Blue Cash Preferred card.

Still, some people choose to redeem their points for LCD toasters.

Since retail rewards meet the preferences and behaviors of a large number of consumers, this seems like a really big advance both for convenience and for being able to get the most out of gift cards (reduced breakage since you only get the cards you want, when you want them, and don’t let the cards go to waste).

Would I prefer that American Express go out and get more points transfer partners instead of investing in this technology? Sure. But I think this will make things much better for the large number of Membership Rewards customers who don’t read this blog.

Update: from the comments it looks like I wasn’t clear, this is a new feature in the American Express app and mobile site, not a separate app that’s for gift cards only.

  1. Glenn said,

    Actually, it doesn’t look like its a “Gift Card App” at all, but rather a new feature of their American Express App, at least on the iPhone. It isn’t obvious from your post Gary what app you should launch for this, and it isn’t mentioned on the Amex site either. That “Available on mobile and tablet” area at the top of the site you referenced begs to be clickable, but it isn’t.

  2. MileageUpdate said,

    I agree if you are redeeming for a GC its basically 1% or so. Many cash back cards start at 2%. I understand some are stuck w MR due to work accts. But miles/hotel points can be worth 4-5x that.

  3. Kimmie said,

    The LCD toasters are no longer available on Aeroplan, but for the same 25k in miles you can buy a Fatboy Doggie Bed, which, according to the reviews on Amazon, is nothing more than a rectangular bean bag mat. Just imagine,for hte price of a Frist Class ticket: http://www.amazon.com/Fatboy-800-3055-Doggielounge-Small-Orange/dp/B001GFCQ50

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